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Weekly Review: Demand at Consumer Level Declines

by 5m Editor
30 August 2008, at 5:13am

US - Weekly review of the US hog industry, written by Glenn Grimes and Ron Plain.

Demand for pork at the consumer level continues to decline. For January-July, the midpoint estimate we have shows a loss of 3.9 percent from 12 months earlier. Demand for beef at the consumer level was also down by 3.7 percent. The generally-weak economy and the high energy costs are believed to be the main factors creating weakness for meats.

The good news continues to be the demand for live hogs. For January-July, the demand for live hogs was up 8.9 percent from 12 months earlier. Larger pork exports and smaller imports are the major drivers in the live hog demand increase. Remember, net exports of pork as a percent of U.S. pork production at 17.8 percent of production is up from 9.3 percent for January-June.

Corn prices have rallied following an August crop report showing a larger crop than expected. However, the corn price increase is likely due to the need for a larger corn crop in 2009, so the contest is on between corn and soybean for acres in 2009. High feed prices will be the normal for the livestock industry for the foreseeable future.

Gilt and sow slaughter data continue to indicate U.S. pork producers are reducing the breeding herd at a slow rate.

Pork product cutout on Tuesday declined by $3.93 per cwt of carcass — the second largest decline since the beginning of 1998. Rumors are that the "pipelines" to Russia and China are full. This big decline on Tuesday followed over a $1 decline in cutout on Monday. The decline continued Thursday and the decline for the week was the largest in the last decade. It looks like we may be losing some of the strong export demand as we go into larger seasonal slaughter.

Pork cutout this Thursday afternoon at $80.51 per cwt was down $9.80 per cwt from a week earlier. Loins at $101.47 per cwt were down $13.68 per cwt, Boston butts at $86.92 per cwt were down $13.96 per cwt, hams at $74.70 per cwt were down $12.06 per cwt and bellies at $79.43 per cwt were down $5.21 per cwt from seven days earlier.

Live barrow and gilt weights were at 258.3 pounds per head down 0.1 pound from a week earlier and down 3.0 pounds per head from a year earlier. This data indicates hog producers have pulled marketings forward between one and two days this year in reaction to the record-high feed prices.

Cash feeder pig prices this week at United Tel-O-Auction showed pigs steady to $5.00 per cwt lower than two weeks earlier. 50-60 pounds pigs sold from $60-70 per cwt at United.

With the lower pork product prices, live negotiated hog prices Friday morning were $5.25 to $10 per cwt lower compared to a week earlier. The weighted average carcass prices Friday morning were pushed $10.04 to $12.30 per cwt lower than seven days earlier.

The top live prices Friday morning for select markets were: Peoria $48 per cwt, Zumbrota, Minnesota did not report and interior Missouri $54.25 per cwt. The weighted average carcass prices for negotiated hogs by area were: western Cornbelt $68.77 per cwt, eastern Cornbelt $71.15 per cwt, Iowa-Minnesota $68.34 per cwt and nation $70.18 per cwt.

Slaughter this week under Federal Inspection was estimated at 2,212 thousand head, up 5.3 percent from 12 months earlier.

5m Editor